Fundamentals of economics 5th edition boyes test bank

Chapter 2—Markets and the Market Process
MULTIPLE CHOICE
1. ____ is an example of an allocation mechanism.
a. Market
b. First-come, first-served
c. Government dictate
d. Random
e. All of these are examples of allocation mechanisms.
ANS: E
PTS: 1
DIF: Easy
REF: Ch 2, Section 1: Allocation Mechanisms
TOP: Allocation
TYP: Factual

OBJ: 2.1

2. Which of the following exemplifies the first come, first-served allocation mechanism?
a. Air travel on the Wednesday before Thanksgiving is always expensive.
b. People who purchase air tickets a week before travel pay more than people who purchase
tickets two months before travel.
c. People will pay scalpers many times the face value of a ticket to the Super Bowl.
d. Customers in a crowded restaurant may slip the headwaiter some money in order to be
seated more quickly.
e. People line up outside stores on Thanksgiving night for the 5:00 a.m. Black Friday (day
after Thanksgiving) sale.
ANS: E
PTS: 1
DIF: Easy
REF: Ch 2, Section 1: Allocation Mechanisms
TOP: Allocation

TYP: Applied

OBJ: 2.1

3. Which of the following exemplifies the market allocation mechanism?
a. Prices of swim suits are marked down in September.
b. A store limits the quantity of an item that a customer can purchase.
c. Medicare (health care for the elderly).
d. Christmas decorations and merchandise in stores by Halloween.
e. All of these are examples of the market allocation mechanism.
ANS: A
OBJ: 2.1

PTS: 1
TOP: Allocation

DIF: Easy
TYP: Applied

REF: Ch 2, Section Preview

4. Which of the following mechanisms is unfair?
a. Market.
b. First-come, first-served.
c. Government
d. Random
e. All of these are unfair in a sense; it depends on the incentives each creates.
ANS: E
OBJ: 2.1

PTS: 1
TOP: Allocation

DIF: Easy
TYP: Factual

REF: Ch 2, Section Preview

5. Which of the following examples deals with price, with the allocation of goods and services, and also
with demand and supply?
a. Lodging in Phoenix may cost twice as much in the winter as in the summer.
b. Lodging in Colorado may cost much more in the winter than in the summer.
c. People will pay scalpers many times the face value of a ticket to a popular show.


d. Customers in a crowded restaurant may slip the headwaiter some money in order to be
seated more quickly.
e. All of these
ANS: E
OBJ: 2.1

PTS: 1
TOP: Allocation

DIF: Easy
TYP: Applied

REF: Ch 2, Section Preview

6. Which of the following is not an allocation mechanism?

a. Fairness
b. Markets
c. First come, first served
d. Random
e. Government
ANS: A
PTS: 1
DIF: Easy
REF: Ch 2, Section 1: Allocation Mechanisms
TOP: Allocation
TYP: Factual

OBJ: 2.1

7. What incentives are created under a first come, first served allocation mechanism?
a. Fairness
b. Equality for all
c. To be first
d. To produce the most
e. To acquire purchasing ability (to obtain income and wealth)
ANS: C
PTS: 1
DIF: Easy
REF: Ch 2, Section 1: Allocation Mechanisms
TOP: Allocation
TYP: Factual

OBJ: 2.1

8. What incentives are created under a government allocation scheme?

a. Fairness
b. Equality for all
c. To be first
d. To be in favor with or match up with government's rules
e. To acquire purchasing ability (to obtain income and wealth)
ANS: D
PTS: 1
DIF: Easy
REF: Ch 2, Section 1: Allocation Mechanisms
TOP: Allocation
TYP: Factual

OBJ: 2.1

9. What incentives are created under a random allocation scheme?
a. Fairness
b. Equal results for all
c. To be first
d. To be in favor with or match up with government's rules
e. No incentives are created
ANS: E
PTS: 1
DIF: Easy
REF: Ch 2, Section 1: Allocation Mechanisms
TOP: Allocation
TYP: Factual
10. What incentives are created under a market allocation scheme?
a. Fairness
b. Equality for all
c. To be first

OBJ: 2.1


d. To be in favor with or match up with government's rules
e. To acquire purchasing ability (to obtain income and wealth)
ANS: E
PTS: 1
DIF: Easy
REF: Ch 2, Section 1: Allocation Mechanisms
TOP: Allocation
TYP: Factual

OBJ: 2.1

11. In the long run, under which allocation mechanism will a society grow most quickly?
a. Market
b. Government
c. First-come, first served
d. Random
e. All of these mechanisms will lead to long-run, sustained economic growth
ANS: A
PTS: 1
DIF: Easy
REF: Ch 2, Section 1: Allocation Mechanisms
TOP: Allocation
TYP: Factual

OBJ: 2.1

12. The market system results in
a. economic growth
b. an increased standard of living
c. efficiency
d. motivation for sellers to improve the quality of their products
e. All of these result from the market system.
ANS: E
PTS: 1
DIF: Easy
REF: Ch 2, Section 1: Allocation Mechanisms
TOP: Allocation
TYP: Factual

OBJ: 2.1

13. The efficiency of an economic system is a measure of
a. how well off people are.
b. how well a system satisfies people's wants and needs.
c. the standard of living.
d. inflation.
e. unemployment.
ANS: B
PTS: 1
DIF: Easy
REF: Ch 2, Section 1: Allocation Mechanisms
TOP: Efficiency
TYP: Factual

OBJ: 2.1

14. The market system is said to be efficient because it
a. takes fewer resources to work than any other system.
b. requires more labor than any other system.
c. determines the price.
d. allocates resources to who wants them.
e. creates fewer goods and services than other systems.
ANS: C
PTS: 1
DIF: Easy
REF: Ch 2, Section 1: Allocation Mechanisms
TOP: Efficiency
TYP: Factual

OBJ: 2.1

15. For a free market to exist, economists say that
a. the government must act in the best interest of the political leadership.
b. all's well that ends well.
c. supply must determine demand.


d. there must be voluntary exchanges and secure private property rights.
e. everything must have a price that is lower than competitive offerings from other countries.
ANS: D
PTS: 1
DIF: Medium
REF: Ch 2, Section 1: Allocation Mechanisms
TOP: Efficiency
TYP: Factual

OBJ: 2.1

16. When economists say that people are self-interested, they mean that people are
a. using their scarce resources to maximize their well-being.
b. selfish.
c. greedy for other peoples' possessions.
d. efficiently substituting market demands for complementary goods.
e. reacting to shortages by creating surpluses of socially acceptable wants and needs.
ANS: A
PTS: 1
DIF: Medium
REF: Ch 2, Section 1: Allocation Mechanisms
TOP: Efficiency
TYP: Interpretive

OBJ: 2.1

17. Even in the United States, not all allocation is carried out in a market because, in some cases, people
a. want more of the product.
b. want less of the product.
c. do not like the market outcome.
d. support the market outcome.
e. disagree with a random allocation.
ANS: C
PTS: 1
DIF: Easy
REF: Ch 2, Section 1: Allocation Mechanisms
TOP: Alternatives TYP: Factual

OBJ: 2.1

18. Even in the United States, not all allocation is carried out in a market because, in some cases,
a. people want more of the product.
b. people want less of the product.
c. the market outcome is not always efficient.
d. people support the market outcome.
e. people disagree with a random allocation.
ANS: C
PTS: 1
DIF: Easy
REF: Ch 2, Section 1: Allocation Mechanisms
TOP: Alternatives TYP: Factual

OBJ: 2.1

19. The market system may not be efficient because people want more of the product. In this situation, the
market
a. is not able to account for all costs and benefits.
b. is always able to account for all costs and benefits.
c. accounts for all costs and benefits except in the case of fast food.
d. cannot account for the cost of Styrofoam cups.
e. is unable to measure the cost of cigarettes.
ANS: A
PTS: 1
DIF: Easy
REF: Ch 2, Section 1: Allocation Mechanisms
TOP: Alternatives TYP: Factual
20. One reason governments pay so much for military weapons is
a. they are greedy.
b. they do not want a free market system for military weapons.

OBJ: 2.1


c. consumers want more than the government is willing to buy.
d. they want to pay more, assuming they will get better-quality weapons.
e. all of these.
ANS: B
PTS: 1
DIF: Medium
REF: Ch 2, Section 1: Allocation Mechanisms
TOP: Alternatives TYP: Interpretive

OBJ: 2.1

21. Why is the market system not universally relied on to allocate goods and services?
a. Government wants to impose its preferences.
b. People do not like the outcome.
c. The market simply cannot function.
d. The market system is not always the most efficient allocation mechanism.
e. All of these.
ANS: E
PTS: 1
DIF: Medium
REF: Ch 2, Section 1: Allocation Mechanisms
TOP: Allocation
TYP: Factual

OBJ: 2.1

22. An example of the market allocation mechanism is
a. The 50% off sale on Christmas items on December 26.
b. A one-pound box of See's candy selling for US $40 in Hong Kong.
c. Discounted matinee movie tickets
d. Buyers paying more than the suggested retail price for a Mazda Miata when they were
introduced in the U.S. in 1990.
e. All of these are examples of the market mechanism.
ANS: E
PTS: 1
DIF: Medium
REF: Ch 2, Section 2: How Markets Function
TOP: Markets
TYP: Applied

OBJ: 2.2

23. The following is an example of the market allocation mechanism
a. Long lines of people waiting to purchase the new Apple iPad
b. The raffle drawing for a trip to Hawaii
c. The American interstate freeway system
d. The $5 pizza special at the nearby-campus pizzeria
e. None of these is an example of the market allocation mechanism.
ANS: D
PTS: 1
DIF: Medium
REF: Ch 2, Section 1: Allocation Mechanisms
TOP: Alternatives TYP: Applied

OBJ: 2.1

24. The following is an example of the first-come, first-served allocation mechanism
a. Long lines of people waiting to purchase the new Apple iPad
b. The raffle drawing for a trip to Hawaii
c. The American interstate freeway system
d. The $5 pizza special at the nearby-campus pizzeria
e. None of these is an example of the market allocation mechanism.
ANS: A
PTS: 1
DIF: Medium
REF: Ch 2, Section 1: Allocation Mechanisms
TOP: Alternatives TYP: Applied
25. The following is an example of the random allocation mechanism
a. Long lines of people waiting to purchase the new Apple iPad

OBJ: 2.1


b.
c.
d.
e.

The raffle drawing for a trip to Hawaii
The American interstate freeway system
The $5 pizza special at the nearby-campus pizzeria
None of these is an example of the market allocation mechanism.

ANS: B
PTS: 1
DIF: Easy

REF: Ch 2, Section 1: Allocation Mechanisms
TOP: Alternatives TYP: Applied

OBJ: 2.1

26. A market
a. makes possible the exchange of goods and services between buyers and sellers.
b. refers only to a specialized place or service where goods and services are exchanged.
c. refers only to a formally organized place where a well-defined commodity is always
traded.
d. refers only to a localized place or service that facilitates the exchange of goods and
services.
e. refers to both large and small places where poorly defined commodities are traded.
ANS: A
PTS: 1
DIF: Easy
REF: Ch 2, Section 2: How Markets Function
TOP: Markets
TYP: Factual

OBJ: 2.2

27. Which of the following statements concerning markets is false?
a. Buyers and sellers communicate with each other directly or indirectly about the quality
and quantity of the product.
b. Buyers and sellers discuss, either face to face or through an agent or broker, what they are
willing to pay and receive for a good or service.
c. Black markets deal with exchanges that violate the law.
d. Markets are always formally organized, like the stock market.
e. Underground market is the term given to unrecorded transactions, whether legal or illegal.

ANS: D
PTS: 1
DIF: Easy
REF: Ch 2, Section 2: How Markets Function
TOP: Markets
TYP: Factual

OBJ: 2.2

28. Which of the following is an example of a market?
a. The exchange of votes and benefits by voters and politicians
b. The exchange of shares of stock
c. Sales and purchases of illegal drugs
d. The exchange of a particular good at many different locations
e. All of these
ANS: E
PTS: 1
DIF: Medium
REF: Ch 2, Section 2: How Markets Function
TOP: Markets
TYP: Factual

OBJ: 2.2

29. Which of the following goods are bought and sold in a market?
a. Food
b. Stocks
c. Foreign goods
d. Drugs
e. All of these

ANS: E
PTS: 1
DIF: Easy
REF: Ch 2, Section 2: How Markets Function

OBJ: 2.2


TOP: Markets

TYP: Factual

30. Markets
a. must be specialized.
b. must be general.
c. must consist of one buyer and one seller.
d. must consist of many buyers and many sellers.
e. can be organized either loosely or formally.
ANS: E
PTS: 1
DIF: Easy
REF: Ch 2, Section 2: How Markets Function
TOP: Markets
TYP: Factual

OBJ: 2.2

31. In general, the purpose of markets is to
a. facilitate the exchange of goods and services between buyers and sellers.
b. provide a means for illegal transactions.

c. provide a forum for the exchange of political benefits.
d. provide a means for unrecorded payments.
e. facilitate the exchange of illegal commodities.
ANS: A
PTS: 1
DIF: Medium
REF: Ch 2, Section 2: How Markets Function
TOP: Markets
TYP: Factual

OBJ: 2.2

32. The market process tends to ensure that
a. consumers get the products firms want to sell them.
b. consumers get the products they want.
c. producers get the products they want.
d. consumers are not left out.
e. inefficiency exists.
ANS: B
PTS: 1
DIF: Easy
REF: Ch 2, Section 2: How Markets Function
TOP: The market process
TYP: Factual

OBJ: 2.2

33. What does the market process refer to?
a. The trading, buying, and selling of goods, services, and resources
b. Barter exchange only

c. Money exchange only
d. The process of allocating goods fairly
e. The process of ensuring that supermarkets exist
ANS: A
PTS: 1
DIF: Easy
REF: Ch 2, Section 2: How Markets Function
TOP: The market process
TYP: Factual

OBJ: 2.2

34. Which of the following is not a likely result in a market system?
a. Consumers increase their marginal profit.
b. Prices tend to be low.
c. Resources tend to be used where they are most valued.
d. Inefficient firms do not last.
e. Inefficiency does not last.
ANS: A
PTS: 1
DIF: Easy
REF: Ch 2, Section 2: How Markets Function

OBJ: 2.2


TOP: The market process

TYP: Factual

35. According to the law of demand, if the price of compact disks decreased, everything else held
constant, the
a. demand for compact disks would increase.
b. quantity demanded of compact disks would decrease.
c. quantity demanded of compact disks would increase.
d. demand for compact disks would decrease.
e. quantity demanded of compact disks would not change.
ANS: C
OBJ: 2.3

PTS: 1
DIF: Medium
TOP: Law of demand

REF: Ch 2, Section 3: Demand
TYP: Interpretive

36. The law of demand illustrates that
a. as price decreases, demand increases.
b. price changes are always in the same direction as demand changes.
c. as price increases, quantity demanded increases.
d. as price decreases, quantity supplied increases.
e. as price decreases, quantity demanded increases.
ANS: E
OBJ: 2.3

PTS: 1
DIF: Easy
TOP: Law of demand

REF: Ch 2, Section 3: Demand
TYP: Factual

37. According to the law of demand,
a. the lower the price of a commodity, the lower the quantity demanded of that commodity.
b. as the price of a commodity increases, the quantity demanded of that commodity also
increases.
c. the lower the price of a commodity, the greater the quantity demanded of that commodity.
d. the lower the price of a commodity, the greater the quantity supplied of that commodity.
e. as the price of a commodity increases, the quantity supplied of that commodity decreases.
ANS: C
OBJ: 2.3

PTS: 1
DIF: Easy
TOP: Law of demand

REF: Ch 2, Section 3: Demand
TYP: Factual

38. Which of the following is not held constant when constructing a demand curve for good X?
a. Consumer income
b. Consumer tastes
c. Price of good X
d. Prices of other goods
e. Consumer expectations
ANS: C
OBJ: 2.3

PTS: 1

TOP: Demand

DIF: Hard
TYP: Interpretive

REF: Ch 2, Section 3: Demand

39. An individual demand schedule or curve shows the various quantities of a good that a person
a. wants and is able to purchase at alternative prices, everything else held the same.
b. has purchased at alternative prices, everything else held the same.
c. is able to purchase at alternative prices, everything else held the same.
d. is able to purchase at alternative income levels, everything else held the same.
e. has purchased at alternative income levels, everything else held the same.
ANS: A
OBJ: 2.3

PTS: 1
DIF: Easy
TOP: Individual demand

REF: Ch 2, Section 3: Demand
TYP: Factual

40. A table or list of the prices and the corresponding quantities demanded of a particular good is called a


a.
b.
c.
d.

e.

demand curve.
demand schedule.
supply curve.
supply schedule.
production possibilities schedule.

ANS: B
OBJ: 2.3

PTS: 1
DIF: Easy
TOP: Demand schedule

REF: Ch 2, Section 3: Demand
TYP: Factual

41. Which of the following is not constant along an individual consumer's demand curve for Coke?
a. The price of Coke
b. The price of Pepsi
c. The consumer's income
d. The consumer's tastes
e. All of these
ANS: A
OBJ: 2.3

PTS: 1
DIF: Medium
TOP: Demand curves

REF: Ch 2, Section 3: Demand
TYP: Applied

Table 2.1
Table 2.1
Quantities of Compact Disks (CDs) Demanded
Price of CD
Maria 1
Abdul 1
Jorgen 1
$14
20
20
15
$12
30
50
17
$10
40
70
24
$ 8
50
90
36
$ 6
60
110

58
1
Maria, Abdul, and Jorgen are the only consumers.
42. According to the data in Table 2.1, the market quantity of compact disks demanded at a price of $8 is
a. 176.
b. 36.
c. 92.
d. 50.
e. 90.
ANS: A
OBJ: 2.3

PTS: 1
DIF: Easy
TOP: Market demand

REF: Ch 2, Section 3: Demand
TYP: Applied

43. Refer to Table 2.1. The market demand schedule is given by what quantities corresponding to $14,
$12, $10, $8, and $6?
a. 228, 176, 134, 97, 65
b. 15, 17, 24, 36, 58
c. 55, 97, 134, 176, 228
d. 20, 30, 40, 50, 60
e. 50, 80, 110, 140, 170
ANS: C
OBJ: 2.3

PTS: 1

DIF: Medium
TOP: Market demand

REF: Ch 2, Section 3: Demand
TYP: Applied

44. Refer to Table 2.1. If Maria and Jorgen are the only consumers in the market, the market demand
schedule would be given by what quantities corresponding to $14, $12, $10, $8, and $6?
a. 40, 80, 110, 140, 170


b.
c.
d.
e.

35, 67, 94, 126, 168
170, 140, 110, 80, 50
35, 47, 64, 86, 118
30, 50, 70, 90, 110

ANS: D
OBJ: 2.3

PTS: 1
DIF: Medium
TOP: Market demand

REF: Ch 2, Section 3: Demand
TYP: Applied

45. The market demand curve, with price on the vertical axis and quantity on the horizontal axis, is
determined by
a. adding individual demand curves in a horizontal direction.
b. adding individual demand curves in a vertical direction.
c. subtracting the demand for the product from the supply of the product.
d. adding the demand for the product and the supply of the product.
e. subtracting supply from demand at each price.
ANS: A
OBJ: 2.3

PTS: 1
DIF: Medium
TOP: Market demand

REF: Ch 2, Section 3: Demand
TYP: Factual

46. A boycott of lettuce would, if effective, cause a(n)
a. increase in the equilibrium quantity of lettuce bought and sold.
b. increase in the price of lettuce.
c. decrease in the demand for lettuce.
d. decrease in the supply of lettuce.
e. decrease in the demand for and the supply of lettuce.
ANS: C
OBJ: 2.3

PTS: 1
DIF: Medium
TOP: Demand shifts

REF: Ch 2, Section 3: Demand
TYP: Applied

47. If the population doubles in size, what can be expected to happen to the market for automobiles?
a. Automobile manufacturers will decrease supply.
b. The price of automobiles will decrease.
c. More automobiles will be sold at any given price.
d. People will use fewer automobiles.
e. None of these
ANS: C
OBJ: 2.3

PTS: 1
DIF: Medium
TOP: Demand shifts

REF: Ch 2, Section 3: Demand
TYP: Applied

48. If everyone expects the price of almonds to rise in the near future, what will happen to the market for
almonds?
a. People will buy the same amount now.
b. People will buy less now, causing a decrease in demand.
c. The amount bought and sold today will increase.
d. The supply will increase today.
e. The amount bought and sold today will decrease.
ANS: C
OBJ: 2.3

PTS: 1
DIF: Medium
TOP: Demand shifts

REF: Ch 2, Section 3: Demand
TYP: Applied

49. Which of the following would not shift the demand curve for golf balls?
a. An increase in the price of golf clubs
b. A decrease in the popularity of golf
c. An increase in the number of golfers
d. All of these would shift the demand curve for golf balls


e. A decrease in the price of golf balls
ANS: E
OBJ: 2.3

PTS: 1
DIF: Medium
TOP: Demand shifts

REF: Ch 2, Section 3: Demand
TYP: Applied

50. A decrease in the price of a product causes
a. demand to increase.
b. the demand curve to shift to the left.
c. movement down along the demand curve.
d. movement up along the demand curve.

e. none of these.
ANS: C
OBJ: 2.3

PTS: 1
DIF: Medium
TOP: Change in quantity demanded

REF: Ch 2, Section 3: Demand
TYP: Applied

51. Assume the demand for watermelons is downward sloping. An increase in price from $1 per pound to
$2 per pound
a. could have been caused by an increase in supply.
b. will cause a larger quantity of watermelons to be demanded.
c. will cause demand to decrease.
d. could have been caused by an extra-large crop yield.
e. will cause a smaller quantity of watermelons to be demanded.
ANS: E
OBJ: 2.3

PTS: 1
DIF: Medium
TOP: Change in quantity demanded

REF: Ch 2, Section 3: Demand
TYP: Applied

52. Which of the following will not cause the demand for ice cream to change?
a. A change in population size

b. A change in the price of ice cream
c. All of these would cause a change in the demand for ice cream.
d. A change in consumer preferences
e. A change in consumer incomes
ANS: B
OBJ: 2.3

PTS: 1
DIF: Hard
TOP: Change in demand

REF: Ch 2, Section 3: Demand
TYP: Applied

53. When economists say that the demand for a product has increased, they mean that
a. consumers are willing and able to purchase more at any given price.
b. the demand curve has shifted to the left.
c. the product has become more scarce and consumers therefore want it more.
d. consumers would be willing and able to pay less to receive the same quantity.
e. the price has decreased and consumers will therefore purchase more of the product.
ANS: A
OBJ: 2.3

PTS: 1
DIF: Medium
TOP: Change in demand

REF: Ch 2, Section 3: Demand
TYP: Interpretive

54. Which of the following will not cause a change in demand?
a. Changes in income
b. Changes in tastes and preferences
c. Changes in the price of the product
d. Changes in the number of buyers
e. Changes in the prices of related goods and services
ANS: C
OBJ: 2.3

PTS: 1
DIF: Medium
TOP: Change in demand

REF: Ch 2, Section 3: Demand
TYP: Interpretive


55. Which of the following may cause a change in demand for a product?
a. A change in the profitability of producing another product
b. A decrease in the cost of producing the product
c. A change in consumer incomes
d. A change in the price of the product
e. A change in the plans of producers
ANS: C
OBJ: 2.3

PTS: 1
DIF: Medium
TOP: Change in demand

REF: Ch 2, Section 3: Demand
TYP: Applied

56. Which of the following statements is true?
a. An increase in demand always means the same as an increase in quantity demanded.
b. Price and quantity demanded are positively related.
c. An increase in quantity demanded means a movement along a given demand curve.
d. An increase in demand means a movement along a given demand curve.
e. An increase in demand means that consumers will purchase less of a product at each
possible price.
ANS: C
OBJ: 2.3

PTS: 1
DIF: Medium
TOP: Change in quantity demanded

REF: Ch 2, Section 3: Demand
TYP: Factual

57. Which of the following would most likely cause an increase in the demand for personal computers?
a. A reduction in the price of personal computers, other things being equal
b. An increase in the supply of personal computers, other things being equal
c. A requirement by universities that all students buy personal computers
d. An increase in the number of computer manufacturers, other things being equal
e. An increase in the cost of computer paper
ANS: C
OBJ: 2.3

PTS: 1

DIF: Hard
TOP: Change in demand

REF: Ch 2, Section 3: Demand
TYP: Applied

58. Assume that there is an inverse relationship between the price and quantity demanded of personal
computers. If the price of computers increases, the
a. quantity supplied decreases.
b. quantity demanded decreases.
c. quantity demanded increases.
d. demand curve shifts to the left.
e. demand curve shifts to the right.
ANS: B
OBJ: 2.3

PTS: 1
DIF: Easy
TOP: Change in quantity demanded

REF: Ch 2, Section 3: Demand
TYP: Applied

59. If consumers are willing and able to pay a higher price to obtain any particular quantity, then
a. demand has increased.
b. supply has increased.
c. demand has decreased.
d. supply has decreased.
e. both demand and supply have decreased.
ANS: A

OBJ: 2.3

PTS: 1
DIF: Medium
TOP: Change in demand

60. Tennis rackets and tennis balls are
a. independent goods.
b. complementary goods.

REF: Ch 2, Section 3: Demand
TYP: Interpretive


c. substitute goods.
d. economic bads.
e. free goods.
ANS: B
OBJ: 2.3

PTS: 1
DIF: Medium
TOP: Complements

REF: Ch 2, Section 3: Demand
TYP: Applied

61. If the price of tennis rackets increases and causes the demand for tennis balls to shift to the left, then
a. tennis rackets and tennis balls are complements.
b. tennis rackets and tennis balls are substitutes.

c. tennis rackets and tennis balls are bads.
d. only tennis balls are bads.
e. tennis rackets and tennis balls are too expensive.
ANS: A
OBJ: 2.3

PTS: 1
DIF: Medium
TOP: Complements

REF: Ch 2, Section 3: Demand
TYP: Applied

62. If a decrease in the demand for product X causes the demand curve for product Y to shift to the right,
then X and Y are most likely to be which of the following?
a. Shoes and laces
b. Tennis balls and tennis rackets
c. Butter and margarine
d. Knives and forks
e. Cars and gasoline
ANS: C
OBJ: 2.3

PTS: 1
TOP: Substitutes

DIF: Hard
TYP: Applied

REF: Ch 2, Section 3: Demand

63. If an increase in the price of good X causes the demand for good Y to decrease, it can be concluded
that
a. X and Y are substitutes.
b. X and Y are complements.
c. X and Y are inferior goods.
d. X and Y are superior goods.
e. there is collusion in the marketplace.
ANS: B
OBJ: 2.3

PTS: 1
DIF: Medium
TOP: Complements

REF: Ch 2, Section 3: Demand
TYP: Applied

64. If the demand curve for product J shifts to the left as the price of product K increases, then
a. the number of consumers of product K has increased.
b. the income of consumers of product K has increased.
c. products J and K are substitute goods.
d. products J and K are complementary goods.
e. products J and K are not related.
ANS: D
OBJ: 2.3

PTS: 1
DIF: Hard
TOP: Complements

REF: Ch 2, Section 3: Demand
TYP: Applied

65. If beer and pretzels are complementary goods, then an increase in the price of beer, other things being
equal, will result in a(n)
a. decrease in the demand for pretzels.
b. decrease in the demand for beer.
c. increase in the demand for pretzels.
d. increase in the quantity demanded of beer.


e. increase in the demand for beer.
ANS: A
OBJ: 2.3

PTS: 1
DIF: Medium
TOP: Complements

REF: Ch 2, Section 3: Demand
TYP: Applied

66. Every Friday night Elizabeth either goes bowling or goes to the movies. Because the price of bowling
went up, Elizabeth now sees more movies. Elizabeth's behavior would be best described as a change in
which determinant of demand?
a. The price of complementary goods
b. Expectations
c. Income
d. The number of buyers

e. The price of substitute goods
ANS: E
OBJ: 2.3

PTS: 1
DIF: Medium
TOP: Substitute goods

REF: Ch 2, Section 3: Demand
TYP: Interpretive

67. A rightward shift in the demand curve for popcorn could be the result of a(n)
a. decrease in the number of buyers of popcorn.
b. decrease in the price of potato chips (a substitute good).
c. increase in the price of butter (a complementary good).
d. increase in income.
e. increase in the price of popcorn.
ANS: D
OBJ: 2.3

PTS: 1
DIF: Medium
TOP: Determinants of demand

REF: Ch 2, Section 3: Demand
TYP: Interpretive

68. Economists use the term supply to refer to
a. the downward-sloping line that relates consumer expenditures to different output levels.
b. the upward-sloping line that relates consumer expenditures to different output levels.

c. a set of price and quantity-supplied combinations, everything else held constant.
d. a particular quantity supplied at a specific price.
e. the amount producers are willing but not able to produce at each price.
ANS: C
OBJ: 2.4

PTS: 1
TOP: Supply

DIF: Medium
TYP: Factual

REF: Ch 2, Section 4: Supply

69. The quantity supplied is
a. the amount sellers are willing and able to offer at a given price during a particular time
period, everything else held constant.
b. the amount sellers are willing and able to offer for sale at all possible prices.
c. a set of price and quantity-supplied combinations, everything else held constant.
d. a list of prices and the corresponding quantities supplied.
e. a downward-sloping line that relates expenditures to different levels of output.
ANS: A
OBJ: 2.4

PTS: 1
DIF: Medium
TOP: Law of supply

REF: Ch 2, Section 4: Supply
TYP: Factual

70. The law of supply illustrates that
a. as price increases, quantity supplied decreases.
b. demand must increase to cause an increase in quantity supplied.
c. a change in price causes a change in supply.
d. price and quantity supplied move in the same direction.
e. price changes are always in the same direction as supply changes.
ANS: D

PTS: 1

DIF: Medium

REF: Ch 2, Section 4: Supply


OBJ: 2.4

TOP: Law of supply

TYP: Factual

71. According to the law of supply, if the price of electric ranges increased, everything else held constant,
the
a. supply of electric ranges would decrease.
b. demand for gas ranges would increase.
c. demand for electric ranges would decrease.
d. supply of electric ranges would increase.
e. quantity supplied of electric ranges would increase.
ANS: E

OBJ: 2.4

PTS: 1
DIF: Medium
TOP: Law of supply

REF: Ch 2, Section 4: Supply
TYP: Interpretive

72. A graph of a list of the prices and corresponding quantities supplied of a good or service is called
a. a supply curve.
b. a supply schedule.
c. a demand curve.
d. a demand schedule.
e. none of these.
ANS: A
OBJ: 2.4

PTS: 1
DIF: Easy
TOP: Supply curve

REF: Ch 2, Section 4: Supply
TYP: Factual

Table 2.2
Table 2.2
Quantities Supplied
1
Price per Loaf

Orobran
Holsum 1
Deliteful 1
$5
60
30
12
$4
50
25
9
$3
40
20
6
$2
30
15
3
$1
20
10
0
1
Orobran, Holsum, and Deliteful are the only producers of bread.
73. According to the data in Table 2.2, the market supply of bread is given by what quantities
corresponding to $5, $4, $3, $2, $1?
a. 102, 84, 66, 48, 30
b. 60, 50, 40, 30, 20
c. 42, 34, 26, 18, 10

d. 90, 75, 60, 45, 30
e. 30, 25, 20, 15, 10
ANS: A
OBJ: 2.4

PTS: 1
DIF: Medium
TOP: Market supply

REF: Ch 2, Section 4: Supply
TYP: Applied

74. Refer to Table 2.2. If Orobran decreased its bakers' wages, it would
a. increase its quantity supplied.
b. increase its supply but the market supply would fall.
c. decrease its supply but the market supply would rise.
d. increase its supply and the market supply would rise.
e. increase its quantity supplied, causing the market quantity supplied to fall.
ANS: D
OBJ: 2.4

PTS: 1
DIF: Medium
TOP: Market supply

REF: Ch 2, Section 4: Supply
TYP: Interpretive


75. Which of the following would least affect the supply of automobiles?

a. An increase in the price of steel
b. An improvement in the technology of automobile manufacturing
c. An increase in the price of motor oil
d. A decrease in the number of automobile producers
e. An increase in the productivity of workers
ANS: C
OBJ: 2.4

PTS: 1
DIF: Medium
TOP: Determinants of supply

REF: Ch 2, Section 4: Supply
TYP: Interpretive

76. Suppose laborers have received a substantial pay increase. What would happen in those markets in
which those workers are employed?
a. Demand would decrease.
b. Output would rise.
c. Price would fall.
d. Supply would increase.
e. Supply would decrease.
ANS: E
OBJ: 2.4

PTS: 1
TOP: Supply

DIF: Hard
TYP: Applied

REF: Ch 2, Section 4: Supply

77. An increase in the price of crude oil will most likely cause
a. an increase in demand for gasoline.
b. a decrease in demand for computer software.
c. governments to institute price controls.
d. an increase in global warming.
e. a decrease in the supply of products made using oil and oil derivatives.
ANS: E
OBJ: 2.4

PTS: 1
TOP: Supply

DIF: Hard
TYP: Applied

REF: Ch 2, Section 4: Supply

78. The Federal Reserve and economists concerned about inflation monitor changes in technology,
knowing improvements in technology tend to
a. decrease demand for technology.
b. increase the quantity supplied as prices decrease.
c. increase supply and lower prices.
d. reduce offshoring and increase gainsharing.
e. do all of these.
ANS: C
OBJ: 2.4

PTS: 1
DIF: Hard
TOP: Change in supply

REF: Ch 2, Section 4: Supply
TYP: Applied

79. If producers must obtain a higher price to produce any given quantity, we can conclude that
a. supply decreased.
b. demand decreased.
c. demand increased.
d. supply increased.
e. both demand and supply increased.
ANS: A
OBJ: 2.4

PTS: 1
DIF: Medium
TOP: Supply shifts

REF: Ch 2, Section 4: Supply
TYP: Interpretive

80. An improvement in entrepreneurial skills applied to the production of a particular product would cause
a. the supply curve for that product to shift to the right.


b.
c.
d.

e.

a movement to the right along the supply curve for that product.
a movement to the left along the supply curve for that product.
an increase in the quantity supplied of that product.
a decrease in the quantity supplied of that product.

ANS: A
OBJ: 2.4

PTS: 1
DIF: Medium
TOP: Supply shifts

REF: Ch 2, Section 4: Supply
TYP: Interpretive

81. If farmers believe that it is more profitable to produce wheat than corn, we can expect the
a. price of wheat to rise.
b. supply of corn to increase.
c. quantity demanded of wheat to decrease.
d. demand for wheat to increase.
e. supply of corn to decrease.
ANS: E
OBJ: 2.4

PTS: 1
DIF: Medium
TOP: Supply shifts

REF: Ch 2, Section 4: Supply
TYP: Applied

82. In terms of the supply side of the market, the initial consequences of a violation of the "other things
being equal" condition is likely to be a
a. movement along the supply curve.
b. movement along the supply schedule.
c. shift of the supply curve.
d. change in quantity supplied.
e. change in quantity sold.
ANS: C
OBJ: 2.4

PTS: 1
DIF: Hard
TOP: Supply shifts

REF: Ch 2, Section 4: Supply
TYP: Interpretive

83. Assume an increase in the profitability of firms in a product market. Over time, we can expect
a. market supply to decrease.
b. the demand for resources to increase.
c. the equilibrium price of the product to rise.
d. firms to leave this market.
e. the equilibrium price of the product to fall.
ANS: B
OBJ: 2.4

PTS: 1

DIF: Hard
TOP: Determinants of supply

REF: Ch 2, Section 4: Supply
TYP: Applied

84. Suppose that sales of a product depend directly on economic growth. If producers of that product
expect an economic recession in the near future, there is likely to be
a. a rightward shift of the supply curve.
b. a movement to the left along the supply curve.
c. a leftward shift of the supply curve.
d. a movement to the right along the supply curve.
e. none of these.
ANS: C
OBJ: 2.4

PTS: 1
DIF: Medium
TOP: Supply shifts

REF: Ch 2, Section 4: Supply
TYP: Interpretive

85. When economists say that the supply of a product has decreased, they mean that
a. a smaller quantity will be produced at any price.
b. the price is too high for equilibrium.
c. a greater quantity will be produced at any price.
d. the price is too low for equilibrium.

e. demand is too high for producers to make a profit.
ANS: A
OBJ: 2.4

PTS: 1
DIF: Medium
TOP: Change in supply

REF: Ch 2, Section 4: Supply
TYP: Interpretive

86. Assume that the supply curve of sirloin steak is upward sloping. If the price increases from $5.25 to
$8.60 per pound,
a. the supply of sirloin steak will rise.
b. a greater quantity of sirloin steak will be supplied.
c. a smaller quantity of sirloin steak will be supplied.
d. the demand for sirloin steak will decrease.
e. the supply of sirloin steak will decrease.
ANS: B
OBJ: 2.4

PTS: 1
DIF: Medium
TOP: Change in quantity supplied

REF: Ch 2, Section 4: Supply
TYP: Applied

87. Which of the following is not a determinant of supply?
a. The prices of resources

b. The price of the good or service
c. The number of producers in the market
d. The technology available
e. The expectations of producers
ANS: B
OBJ: 2.4

PTS: 1
DIF: Easy
TOP: Determinants of supply

REF: Ch 2, Section 4: Supply
TYP: Factual

88. In which of the following statements are the terms demand, supply, quantity demanded, and/or
quantity supplied used correctly?
a. Changes in demand and supply cause changes in the equilibrium price.
b. If the demand rises, supply rises.
c. Oranges are cheaper in Florida and therefore the demand is greater in Florida.
d. When the quantity demanded exceeds supply, the equilibrium price will rise.
e. All of these
ANS: A
OBJ: 2.4

PTS: 1
DIF: Hard
TOP: Shifts in demand and supply

REF: Ch 2, Section 4: Supply
TYP: Applied

89. If a smaller quantity is supplied at each price, then
a. supply has decreased.
b. supply has increased.
c. demand has decreased.
d. demand has increased.
e. none of these is true.
ANS: A
OBJ: 2.4

PTS: 1
DIF: Medium
TOP: Change in supply

REF: Ch 2, Section 4: Supply
TYP: Applied

90. If a U.S. firm is purchasing supplies from another country and that country's currency rose relative to
the dollar, the
a. cost to the U.S. firm for the same quantity of the supplies has fallen.
b. cost to the U.S. firm for the same quantity of the supplies has risen.
c. firm will produce more at every output price.
d. firm will produce the same at every output price.
e. firm will not produce.
ANS: B

PTS: 1

DIF: Easy

REF: Ch 2, Section 4: Supply


OBJ: 2.4

TOP: International effects

TYP: Factual

91. A market is in equilibrium when
a. equilibrium price equals equilibrium quantity.
b. the price is high.
c. the price is low.
d. the government imposes price controls.
e. the demand and supply curves intersect.
ANS: E
PTS: 1
DIF: Easy
REF: Ch 2, Section 5: Equilibrium: Putting Demand And Supply Together
OBJ: 2.5
TOP: Equilibrium TYP: Factual
92. A market is in equilibrium when
a. changes in demand are equal to changes in supply.
b. the amount consumers wish to purchase is equal to the amount producers wish to produce.
c. the determinants of supply are equal to the determinants of demand.
d. quantity demanded is equal to quantity supplied.
e. consumer preferences are equal to production costs.
ANS: D
PTS: 1
DIF: Easy

REF: Ch 2, Section 5: Equilibrium: Putting Demand And Supply Together
OBJ: 2.5
TOP: Equilibrium TYP: Factual
93. Which of the following cannot occur when a market is not in equilibrium?
a. There is a shortage.
b. The quantity demanded and the quantity supplied are not equal.
c. The quantity demanded and the quantity supplied are equal.
d. There is a surplus.
e. The quantity demanded is greater than the quantity supplied.
ANS: C
PTS: 1
DIF: Easy
REF: Ch 2, Section 5: Equilibrium: Putting Demand And Supply Together
OBJ: 2.5
TOP: Disequilibrium
TYP: Factual
94. A price at which quantity demanded equals quantity supplied
a. could not possibly exist in the short run.
b. will cause a shift in demand.
c. is below the equilibrium price.
d. is an equilibrium price.
e. is above the equilibrium price.
ANS: D
PTS: 1
DIF: Easy
REF: Ch 2, Section 5: Equilibrium: Putting Demand And Supply Together
OBJ: 2.5
TOP: Equilibrium TYP: Factual
95. At the equilibrium price,
a. there is a tendency for the price to rise.

b. there is no pressure on price to rise or fall.
c. quantity demanded exceeds quantity supplied.
d. quantity supplied exceeds quantity demanded.
e. there is a tendency for the price to fall.
ANS: B
PTS: 1
DIF: Medium
REF: Ch 2, Section 5: Equilibrium: Putting Demand And Supply Together


OBJ: 2.5

TOP: Equilibrium

TYP: Interpretive

Table 2.3

Price per Loaf
$5
$4
$3
$2
$1

Table 2.3
Quantity Demanded
30
48
66

84
102

Quantity Supplied
102
84
66
48
30

96. According to the data in Table 2.3, equilibrium in the bread market occurs at which price and quantity
supplied?
a. $5; 72
b. $4; 36
c. $3; 66
d. $2; 36
e. $1; 72
ANS: C
PTS: 1
DIF: Easy
REF: Ch 2, Section 5: Equilibrium: Putting Demand And Supply Together
OBJ: 2.5
TOP: Equilibrium TYP: Applied
97. Beginning with equilibrium in Table 2.3, an increase in price of $1 would
a. cause a shortage of 36.
b. cause a surplus of 36.
c. cause a shortage of 72.
d. cause a surplus of 72.
e. lead to an increase in demand.
ANS: B

PTS: 1
DIF: Hard
REF: Ch 2, Section 5: Equilibrium: Putting Demand And Supply Together
OBJ: 2.5
TOP: Equilibrium TYP: Interpretive
98. Refer to Table 2.3. Assuming linearity, an increase in demand of 18 units would lead to a new
equilibrium at
a. $4; 88 units.
b. $3.50; 75 units.
c. $2.50; 93 units.
d. $2; 102 units.
e. $3; 84 units.
ANS: B
PTS: 1
DIF: Hard
REF: Ch 2, Section 5: Equilibrium: Putting Demand And Supply Together
OBJ: 2.5
TOP: Equilibrium TYP: Interpretive
99. Disequilibrium does not exist when
a. there is a shortage.
b. there is a surplus.
c. the existing price is above the equilibrium price.
d. the existing price is below the equilibrium price.
e. quantity demanded and quantity supplied are equal.
ANS: E

PTS: 1

DIF: Easy

REF: Ch 2, Section 5: Equilibrium: Putting Demand And Supply Together
OBJ: 2.5
TOP: Disequilibrium
TYP: Factual
100. Which of the following statements is true of any market?
a. The interaction of demand and supply determines the price and quantity in that market.
b. There must be a supply of the item but not necessarily a demand for the item.
c. Demand and supply are always equal for an item.
d. There must be a demand for the item but not necessarily a supply of the item.
e. The market will always be in equilibrium.
ANS: A
PTS: 1
DIF: Medium
REF: Ch 2, Section 5: Equilibrium: Putting Demand And Supply Together
OBJ: 2.5
TOP: Equilibrium TYP: Interpretive
101. From a point of equilibrium, which of the following would most likely result in a surplus?
a. If demand shifted to the right
b. If the government kept the price greater than the equilibrium price
c. If supply shifted to the left
d. If the government kept the price below the equilibrium price
e. If the quantity demanded was greater than the quantity supplied
ANS: B
PTS: 1
DIF: Medium
REF: Ch 2, Section 5: Equilibrium: Putting Demand And Supply Together
OBJ: 2.5
TOP: Surplus
TYP: Interpretive

102. When a shortage exists in a market,
a. the actual price is lower than the equilibrium price.
b. there is an excess quantity supplied.
c. consumers increase the quantities they are willing and able to purchase.
d. suppliers will quit producing until the shortage disappears.
e. the actual price is greater than the equilibrium price.
ANS: A
PTS: 1
DIF: Medium
REF: Ch 2, Section 5: Equilibrium: Putting Demand And Supply Together
OBJ: 2.5
TOP: Shortage
TYP: Interpretive
103. The difference between scarcity and shortages is
a. scarcity is reflected in lower prices.
b. shortages are always caused by government.
c. shortages can be eliminated by higher prices.
d. scarcity reflects surpluses.
e. all of these.
ANS: C
PTS: 1
DIF: Medium
REF: Ch 2, Section 5: Equilibrium: Putting Demand And Supply Together
OBJ: 2.5
TOP: Disequilibrium
TYP: Interpretive
104. If price is below equilibrium,
a. demand is too low for equilibrium.
b. the income and substitution effects will cause the price to rise.
c. quantity demanded exceeds quantity supplied, and a shortage exists.

d. demand will increase.
e. quantity supplied exceeds quantity demanded, and a shortage exists.
ANS: C

PTS: 1

DIF: Medium


REF: Ch 2, Section 5: Equilibrium: Putting Demand And Supply Together
OBJ: 2.5
TOP: Disequilibrium
TYP: Applied
Figure 2.1

105. Consider the market described by the demand and supply curves in Figure 2.1. Which of the following
is true if the current market price is $40 per unit?
a. The quantity demanded is 400 units.
b. There is a shortage of 200 units.
c. The quantity sold is 200 units.
d. The quantity supplied is 200 units.
e. There is an excess demand of 200 units.
ANS: C
PTS: 1
DIF: Medium
REF: Ch 2, Section 5: Equilibrium: Putting Demand And Supply Together
OBJ: 2.5
TOP: Equilibrium TYP: Applied
106. Assume that the market described by the demand and supply curves in Figure 2.1 is originally in
equilibrium. What is the most likely consequence of a government-imposed price ceiling (maximum

price that producers are allowed to charge) of $10 per unit?
a. Supply will increase.
b. Demand will increase.
c. Quantity supplied will decrease.
d. There will be a surplus of the good.
e. There will be no consequence at all.
ANS: C
PTS: 1
DIF: Medium
REF: Ch 2, Section 5: Equilibrium: Putting Demand And Supply Together
OBJ: 2.5
TOP: Price ceiling TYP: Applied
Table 2.4

Price

Table 2.4
Quantity Demanded

Quantity Supplied


$1
$2
$3
$4
$5

1,500
1,000

900
600
400

500
700
900
1,100
1,300

107. Consider the market represented by the schedule in Table 2.4. At a price of $2 per unit,
a. the quantity purchased is 1,000 units.
b. the quantity sold is 700 units.
c. there is a surplus of 300 units.
d. there will be a tendency for the price to decrease.
e. there is a surplus of 700 units.
ANS: B
PTS: 1
DIF: Medium
REF: Ch 2, Section 5: Equilibrium: Putting Demand And Supply Together
OBJ: 2.5
TOP: Equilibrium TYP: Applied
108. Consider the market represented by the schedule in Table 2.4. At equilibrium,
a. the market price is $5 per unit.
b. there is a surplus of 900 units.
c. there is a shortage of 900 units.
d. 900 units are traded at a price of $3 per unit.
e. the market price is $1 per unit and the quantity traded is 500 units.
ANS: D
PTS: 1

DIF: Medium
REF: Ch 2, Section 5: Equilibrium: Putting Demand And Supply Together
OBJ: 2.5
TOP: Equilibrium TYP: Applied
109. Consider the market described by the schedule in Table 2.4. Which of the following is true?
a. The law of demand is violated.
b. The law of supply is violated.
c. There is no equilibrium.
d. At $5 per unit, people will purchase 400 units.
e. At $2 per unit, people will purchase 1000 units.
ANS: D
PTS: 1
DIF: Medium
REF: Ch 2, Section 5: Equilibrium: Putting Demand And Supply Together
OBJ: 2.5
TOP: Equilibrium TYP: Applied
110. Consider the market described by the schedule in Table 2.4. At a price of $5 per unit,
a. the quantity purchased is 1,000 units.
b. the quantity traded is 1,000 units.
c. there is a surplus of 900 units.
d. the quantity sold is 1,800 units.
e. there is excess demand.
ANS: C
PTS: 1
DIF: Medium
REF: Ch 2, Section 5: Equilibrium: Putting Demand And Supply Together
OBJ: 2.5
TOP: Equilibrium TYP: Applied
Figure 2.2

111. In Figure 2.2, a price of
a. M would cause a surplus of BE quantity.
b. M would cause a shortage of BE quantity.
c. N would cause a shortage of BE quantity.
d. 0 would bring about an equilibrium solution.
e. L would cause a shortage of BC quantity.
ANS: A
PTS: 1
DIF: Medium
REF: Ch 2, Section 5: Equilibrium: Putting Demand And Supply Together
OBJ: 2.5
TOP: Equilibrium TYP: Applied
112. In Figure 2.2,
a. at a price of M, quantity B will be sold.
b. at a price of M, quantity E will be sold.
c. at a price of N, quantity C will be sold.
d. the change in demand exceeds the change in supply.
e. the change in supply exceeds the change in demand.
ANS: A
PTS: 1
DIF: Medium
REF: Ch 2, Section 5: Equilibrium: Putting Demand And Supply Together
OBJ: 2.5
TOP: Equilibrium TYP: Applied
113. An equilibrium in a market results when the market
a. produces a surplus.
b. produces an output at which the price consumers are willing to pay exactly equals the
price producers are willing to accept.
c. produces an output at which the demand curve lies above the supply curve.

d. results in a product that can be purchased at many different prices.
e. produces an output at which the supply curve lies above the demand curve.
ANS: B
PTS: 1
DIF: Medium
REF: Ch 2, Section 5: Equilibrium: Putting Demand And Supply Together
OBJ: 2.5
TOP: Equilibrium TYP: Interpretive
114. The output level that occurs in any market that is in equilibrium


a.
b.
c.
d.
e.

is the quantity where the supply curve intersects the Y axis.
is the quantity where the demand curve intersects the X axis.
is the quantity at an output level in which buyers will pay more than suppliers require.
is an output level where buyers will not pay as much as suppliers require.
means consumers or producers cannot be made better off by an expansion or contraction
of output.

ANS: E
PTS: 1
DIF: Hard
REF: Ch 2, Section 5: Equilibrium: Putting Demand And Supply Together
OBJ: 2.5
TOP: Equilibrium TYP: Interpretive

Figure 2.3

115. In Figure 2.3, the initial demand curve is D1 and the supply curve is S1. Which of the following would
most likely change equilibrium from point A to point D?
a. An increase in income
b. A decrease in the price of good X
c. An increase in the price of a complementary good
d. Lower productivity
e. An increase in the price of a substitute good
ANS:
REF:
OBJ:
TYP:

C
PTS: 1
DIF: Medium
Ch 2, Section 5: Equilibrium: Putting Demand And Supply Together
2.6
TOP: Changes in equilibrium: demand shifts
Applied

116. In Figure 2.3, the initial demand curve is D1 and the supply curve is S1. The most likely result of
pessimistic producer expectations is a move from equilibrium
a. A to equilibrium D.
b. A to equilibrium E.
c. A to equilibrium F.
d. B to equilibrium A.
e. A to equilibrium B.
ANS: E

PTS: 1
DIF: Medium
REF: Ch 2, Section 5: Equilibrium: Putting Demand And Supply Together
OBJ: 2.6
TOP: Changes in equilibrium: demand shifts